E-commerce is shaking up the fashion scene in India, making it more accessible and exciting than ever before. Gone are the days when fashion trends were confined to high-end boutiques in major cities. Now, with just a few clicks, you can explore and purchase from an extensive range of high-end and value brands from the comfort of your home. 

The fashion industry has emerged as a colossal market, outpacing overall retail growth. However, 2023 was an exception. The fashion segment grew in line with the general retail market, a departure from its usual trend of higher growth rates. Why? Well, the inflationary pressures, along with a subdued job market and thereby muted consumer spending forced consumers to think twice before splurging on fashion products, especially amongst India B and C consumers, which represent the middle and lower income groups. 

While many fashion giants were struggling to keep their doors open last year, online fashion retailers managed to stand resilient and even grow during tough times. Our experts at Redseer delved deep into the fashion market and brought out some exciting insights about this interesting trend. Let’s explore how e-commerce defied the odds and showcased impressive performance during a bearish fashion market. Stick with us as we unravel the data, trends, and consumer behaviors driving this dynamic industry. Welcome to the world of fashion—where online rules, and resilience is the key and change is the only constant. 

Let us paint a picture of India’s retail sector and how much of it is dominated by the Fashion industry. While it modestly expanded from USD 885-895 billion in 2022 to USD 940-950 billion in 2023, fashion accounted for about 10% of the market. As overall fashion grew by ~6%, from 2022-2023, e-commerce soared by 10-12%, indicating the resilience of fashion e-commerce, despite poor macros. The allure of new categories, trendsetting products, and the fervour for fast fashion sparked a surge in purchases, and naturally, people could not resist. That’s the secret sauce: convenience, variety, and irresistible deals. 

In 2023, e-commerce’s slice of the fashion pie surged from 14% to 15%, driven by the influx of new online shoppers and increased spending by existing ones. After all, it’s not about just buying clothes—it’s about an experience, igniting a desire for more and these insights are just the beginning of a compelling narrative.  

Power-shoppers: How affluent consumers fuelled fashion growth 

Let’s take a closer look at which consumer groups drive most of the growth in fashion e-commerce. The affluent “India A” consumers led the charge, while “India B and C” consumers were more cautious with their spending. 

The numbers here tell a story: While India A had an impressive compound annual growth rate (CAGR) of 14-16%, India B and C’s CAGR was around 8-10%. Clearly, India A led the charge in boosting online fashion platforms. 

India A shoppers focused on a wide variety of apparel, especially the latest trends and fashionable items. In contrast, India B consumers preferred lower-cost alternatives and were often influenced by India A’s past trends or celebrities. 

Long-term Outlook of the Online Fashion Market 

So, what does the long-term future for fashion hold? How promising is it? 

By now, one must have figured out that the fashion segment is a realm with untapped potential. Currently valued at around USD 93 billion, the fashion market is expected to grow to approximately USD 200 billion by 2030. That’s almost double the growth within 6-7 years! With evolving human desires and needs, ongoing consumer interest in fashion will always be preserved. Moreover, we must not overlook the increased spending capacity that continues to drive this dynamic market forward. 

But who’s stealing the real show? The online fashion sector, which is poised to steal the spotlight with its meteoric rise. With experts forecasting a staggering USD 36 billion surge in GMV by 2030, fuelled by an impressive CAGR of 20% from 2023 to 2030, the stage is set for unprecedented opportunities in the e-commerce sector. As more folks hop onto the online shopping bandwagon, the future of fashion e-commerce is brighter than ever.  

E-Commerce Wave: What to expect in the next decade? 

Below themes are likely to play out as fashion e-commerce embarks on this exciting journey. 

• Fast fashion will be the theme of the decade: While Gen Z will account for 12-14% of shoppers, they will drive 20-25% of online fashion spending, particularly led by fast fashion trends, which have been a blockbuster in global markets.  
• Premiumization to prevail driven by India A aspirations: Simultaneously, premiumization is expected to continue, particularly driven by the aspirations of India’s affluent “India A” segment. This group is projected to see a 25%+ CAGR in spending over the next seven years, primarily due to wallet expansion and upgrades. The expansion of global and luxury selections will be the key to winning this segment.  
• New shopper growth to benefit India B/C focused platforms: Parallelly, millions of new shoppers from the India B and C cohorts will also benefit these platforms. Around 150 million new shoppers from these cohorts are expected to buy fashion online by 2030. However, getting these demographics hooked may require innovative approaches. Maybe, it’s time to shake things up with some gamification -attracting consumers through engaging games and enticing online rewards has proven to be an effective strategy globally, capturing attention and encouraging purchases in a fun and interactive way. 
• D2C brands to become formidable: Direct-to-consumer (D2C) brands are expected to contribute around 15% of the fashion e-commerce gross merchandise value (GMV) by 2030. These brands will continue to rely on these e-commerce marketplaces to scale, with influencer and social media marketing driving awareness and marketplace ads boosting discovery. 
• Cross-selling lifestyle will become the status quo: Furthermore, an evolution towards cross-selling lifestyle products will become the norm for fashion-first e-commerce platforms. Beyond core fashion items, such as clothing and footwear, consumers will increasingly head towards accessories, beauty, personal care, and home décor products. This holistic approach will help the platforms tap a larger wallet share and expand customer LTV.  

Fashion is a never-ending loop. Every day brings new trends that align with ever-changing human emotions, moods, and seasons.  Regardless of years or seasons, fashion remains an industry brimming with potential for business growth.  

Interested in exploring or capitalizing on these trends? Do you want to hop aboard this e-commerce bandwagon or need some insights? Reach out to our E-Commerce Industry Expert  Kushal Bhatnagar  or  subscribe  to our weekly newsletters today!